Evolution of management systems in two Indian business groups

Abstract

The Focus of this research is to understand the development, growth and management of two Indian business groups. The research has been conducted as an exploratory Field study to obtain insights into the Following: 1) To determine the nature of the entrepreneurial function during the inception phase and how it fitted the prevailing socio-economic-political conditions. 2) To study the evolution of the group's strategy, structure, process and systems by identifying a constellation of Forces determining the adoption of specific postures at different points along its path of growth. 3) To identify major orientations of the group which in turn become the influencing source of the group's strategy, structure, processes and systems. 4) To gauge the emerging trends in family management by focusing on the effects of different generations of the same family on the development of management systems. 5) To study the determinants of the process of professionalization and its mode of operationalization in the organization. 6) To discern, to some extent, the possible impact of different technology and market environments on management systems of companies belonging to the same group. The major Finding of the research is the presence of two distinct orientations pursued by the groups. These are the commercial/financial orientation as against the technological orientation derived partly from their differing entrepreneurial modes. The pattern of entrepreneurship in the Financially oriented group is capital based where the founder had a background of speculative activities, network of contacts within the community and a sound Financial base owing to capital accumulation. The other group is characterized by skill based entrepreneurship where the Founder had an academic background, network of contacts with foreign principals, and possessed selling skills. These orientations have been found to have an impact on choice of strategy, nature of structure, processes and systems. Under the dictates of these orientations, management systems are shaped by technology, market, personality of the top man, degree of personal involvement and location. Two underlying growth themes have been identified: Growth by division and Growth by cohesion. Some propositions regarding the process of professionalization are developed highlighting the impact of strategy, technology and appearance of younger generation of Family members on the emergence of professionalization. An interesting Finding is the differing rates of professionalization among the various Functions in the organization. The Findings are placed in the perspective of stereotypes about Family management, characteristics of Indian Management and other business groups. Finally, pertinent issues and emerging trends and challenges in the context of Family organizations are highlighted.